Practical use of Elliott Wave analysis

[tech/a]

Ive often said I only use Elliot as a guide to where a trade I'm taking is in the life of a move in an instrument. Ive found it particularly helpful at MAJOR turning points when I can see many of the stocks making up an index displaying very similar counts.

Some have shown an interest in gaining some knowledge and some here like Boggo are well versed.

Here is an excerpt from Robert Proctor.

Click to enlarge



Here is the whole interview if interested.

http://www.elliottwave.com/freeupda...-You-ll--Get--the-Elliott-Wave-Principle.aspx

The best book Ive found on the topic is.

Dynamic Trading
Robert Miner
ISBN 0-934380-83-x

 

[KurwaJegoMac]

Re: Practical use of Elliot analysis.

Thanks for sharing Tech/a,

Regarding 'Dynamic Trading' - does it cover the content found in 'Elliot Wave Principal' by Frost & Prechter or is it an extension of the 'Elliot Wave Principal' topics?

I have not read much on EW, save for some snippets in Nick Radge's Adaptive Analysis as well as some of your posts. So I can be assumed to have zero knowledge - therefore which book(s) would you recommend I read/start with?

Do you ever use EW for determing your entry or exit points or merely to determine the approximate stage/lifecycle of your trade to minimise getting into a trade too late/early?

Currently I trade a very simple breakout with stops at key resistant levels. It's a very simple system but I'm happy with the results so far (i've only been involved with the sharemarket for 3 years). Obviously i'd like to tweak and improve the system for better performance and I'm considering using EW to use an indicator of whether i'm entering a stock too late in a move. Have you found it reliable/works well with your breakout strategy?

Thanks.

 

[Whiskers]

Re: Practical use of Elliot analysis.

I don't think Pretcher is entirely right claiming market analysis is and must be a science, not an art.

Certainly while scientific methods are important for discerning the data, my understanding of Elliott's theory was he had an art (skill in conducting any human activity) to interpreting the data... to work through different posibilities of wave counts.

For me science is a systematic knowledge of the physical or material world gained through observation and experimentation.

I tend to believe art is the skill of utalising that historic scientific data for future purposes.

If the market analysis was just scientifically predictable from the data, wouldn't there be many 'scientists' accurately predicting the markets?

 

[Sean K]

Re: Practical use of Elliot analysis.

Great thread tech, but it's going to end in an argument I feel.

I am a searcher open to all ideas and ways to be a better trader/investor.

But,

Please show us some consistent, live, EW buy and sells on top of the initial analysis.

For your theory to be proved, put up the initial analysis (presumedly basic TA) with the EW overlaid, and how it confirms your TA.

'Live' as in before the fact.

Radge started doing this at one point some time ago and when we began keeping track he bailed. Like, totally spit the dummy. Wasn't up for scrutiny. Even though he was supposed to be sharing analysis.

I don't think Pretcher is entirely right claiming market analysis is and must be a science, not an art.

YES, How can anything be a 'science' when it isn't correct until after it's unfolded and is not repeatable?

My prediction is that when EW is used as a trading trigger this thread will die a horrible death.

Looking forward to be proved very very wrong.

I do say again, I WANT THIS TO WORK. SHOW ME.

 

[tech/a]

Re: Practical use of Elliot analysis.

Kennas

My use is as an adjunct to my analysis.

I use other analysis to confirm.
In particular with the index as Broadway also pointed out--- when other stock in the index also show the very same or very similar counts.

Now for live showings
Have a look at the PEN thread post 1004 called way way before it occurred the count then was the same as this chart.



If you then go to the XAO thread you'll see that I posted the chart (Elliot) on the 22/02 (I think) way way before the "Correction."

If you also go back to 2007 I also called that with charts and I also called that at 6000 that also wasn't the top with "Evidence" There is a whole thread on it---I was ridiculed--Par for the course-- on that as well.

Now that we have that out of the way lets look at
THIS CHART





The current XJO
Im long on a group of stock and expecting trading to 4650 to 4750 before the last leg down to wave 5 is underway.
This is likely to be a corrective phase which will take a while as wave 2 was very quick.I would/will be looking for a triangle type correction before the final thrust down.

Analysis on individual stocks will see me sell or hold.

Finally
I'm not here to prove Elliot Wave analysis.
I'm certainly NOT A PURIST--I'm NOT and EXPERT (I dont think you have to be) I have found a way to use it and trust it in my trading. I'm just passing it on to those interested. I cheat because I use Advanced Get to count the waves---while I can hand count ---Aget is far quicker.

The fun begins when the wave counts alter and when that happens I will try and help those struggling with the concept of dynamic wave counts so that it is no longer a problem but an expected occurrence in this analysis which helps further to understand where we are in a trade or prospective trade.

I'm not going to argue for it but work through charts--those that follow can---those that cant get their head around it or find no use in it can trade as they have before---without it.

 

[Garpal Gumnut]

Re: Practical use of Elliot analysis.

Elliot makes more sense, as it follows Fibonnaci's reasoning, than most hair brained black boxes out there, and you can do it yourself.

It works well for long term analysis.

gg

 

[wayneL]

Re: Practical use of Elliott analysis

I worked for a firm researching EW a few years ago. I didn't see anything with a higher probability than other analyses.

It can be made to work with standard risk control and money management, but there is no inherent edge there IMO.

Too subjective.

 

[tech/a]

Re: Practical use of Elliott analysis

Too subjective.

I find that (Its fluid subjectivity) a very strong plus for the analysis.

 

[barney]

Re: Practical use of Elliot analysis.

I'm not going to argue for it but work through charts--those that follow can

Also not looking for EW arguments as they generally serve no purpose. I have a basic understanding of the mechanics, but don't make trades using it.

With that in mind tech ...... As you know I hold PEN so it is of particular interest to me. Couple of questions for discussion.

Using EW, would we be looking for a further 2 waves to the downside to complete the 5 wave down sequence? If so, do you have a projected SP?

Or ...... does the current abc pattern most likely represent the full extent of the downside spike, and if so, why?

Obviously PEN is a slightly different scenario due to the change in recent fundamental world events. That being the case, does the previous price action to this point hold less relevance, and do we/don't we re-start the EW counts from the current SP?

As I say, questions are for discussion and interest only .......... Cheers.

 

[tech/a]

Re: Practical use of Elliott analysis

Happy to use PEN as a point of discussion.
I hold PEN now at .078 (I think) I expect this to be a wave 4 in the current move and expect price to rise to around 10c I will be looking for signs of weakness at around these levels with VSA--when I see them Ill be out.
This for me is a short term risky trade of wave 4.
Followed by a lower wave 5 ending at around the wave 3 mark or lower.
Too early to call. It depends on how deep the wave 4 ends up.

 

[mazzatelli]

Re: Practical use of Elliot analysis.

I don't think Pretcher is entirely right claiming market analysis is and must be a science, not an art.

Certainly while scientific methods are important for discerning the data, my understanding of Elliott's theory was he had an art (skill in conducting any human activity) to interpreting the data... to work through different posibilities of wave counts.

For me science is a systematic knowledge of the physical or material world gained through observation and experimentation.

I tend to believe art is the skill of utalising that historic scientific data for future purposes.

If the market analysis was just scientifically predictable from the data, wouldn't there be many 'scientists' accurately predicting the markets?

And you don't think selecting the right parameters, models and diagnostics to measure price or vol scientifically doesn't require subjective calls or "art" as you would call it?

Always funny to see non mathematicians/statisticians speak of financial mathematics as if everything derived is of a deterministic nature.

 

[professor_frink]

Re: Practical use of Elliott analysis

Hi tech,

I have a couple of questions in regards to the way that EW is applied. Whilst I can fully appreciate that counts evolve over time, the actual application of this side of things has me a little lost.

A couple of examples to illustrate my issues with it:

From July 2009:

On the 10th July:

XAO

You'll notice that many patterns mimick the index.
This has occured at most times where a confluence in price action in many other stocks preceeds longer term moves.

In the major downturn many stocks were in stage 5 of 5 Elliott counts as was the Index.
Ive noticed when there are a number of stocks displaying similar counts its a MONTE!

This is likely to be similar.

This opinion you've expressed above ties in with the chart you posted in the XAO analysis thread(post 6565), which was labelling that current correction as the start of a wave 5 down to new lows in the context of the 07-08 bearmarket.


And then at the end of that month you highlighted that the 14th of July was the end of an ABC correction:

You could have been long from the bottom of the ABC corrective move
I have been since 14/07/09 and its been a very good 2 weeks.
Initial target for this move is 4388 which seems to be close to other types of analysis targets.

So based on what you've said in those posts, the count has obviously changed in those 2 trading days, but what I can't wrap my head around completely is where a count can change so drastically, from a new leg down in a once in a generation bear market to a small ABC correction in an ongoing rally.

What are the triggers that can change a count so drastically, and how would it be applied in real time?

 

[tech/a]

Prof

Ill answer tonight as all my Elliott software is home.

 

[bbker]

Re: Practical use of Elliot analysis.

Now that we have that out of the way lets look at
THIS CHART


View attachment 41965


The current XJO
Im long on a group of stock and expecting trading to 4650 to 4750 before the last leg down to wave 5 is underway.

Don't you mean "UP to wave 5"?
(since wave 5 descends)

 

[wayneL]

Re: Practical use of Elliot analysis.

Don't you mean "UP to wave 5"?
(since wave 5 descends)

Impulse wave 5 is upwards.

 

[Boggo]

I think I could have a comment/input to every post on this thread so far if I had the time right now but I don't today.
Good commonsense questions are being asked and responded to, lets keep it running smoothly.

Ive often said I only use Elliot as a guide to where a trade I'm taking is in the life of a move in an instrument. Ive found it particularly helpful at MAJOR turning points when I can see many of the stocks making up an index displaying very similar counts.

I agree 100% with tech/a on this, this is where EW is really valuable I believe.
I have quickly grasped an example to chart below, there are better and many similiar examples but this is a recent one.

Thanks for sharing Tech/a,

Regarding 'Dynamic Trading' - does it cover the content found in 'Elliot Wave Principal' by Frost & Prechter or is it an extension of the 'Elliot Wave Principal' topics?

Do you ever use EW for determing your entry or exit points or merely to determine the approximate stage/lifecycle of your trade to minimise getting into a trade too late/early?

Currently I trade a very simple breakout with stops at key resistant levels. It's a very simple system but I'm happy with the results so far (i've only been involved with the sharemarket for 3 years). Obviously i'd like to tweak and improve the system for better performance and I'm considering using EW to use an indicator of whether i'm entering a stock too late in a move. Have you found it reliable/works well with your breakout strategy?

Dynamic Trading by Robert Miner is the book in my opinion (all 1.73kg of it !!), straight to the point with practical everyday examples of how the process can be used without getting bogged down in theory.

The charts below are two of ELM which is a stock that came up in my system last night and it was also being discussed somewhere else on this site last night.

The process to answer your last two paras...

ELM chart 1 below - potential breakout - at resistance - if it breaks out will resistance become support - where is the entry - where is the stop - what is the target - is it even worth considering.

ELM chart 2 below - three waves complete - W.4 complete on breakout ? - is it playing by the rules - yes, W.3 made target - where to now - what is W.5 min and max target - what is R/R at min target.

Is it a potential candidate still ?? process complete, next.

Chart 1 and 2 (click to expand)

 

[tech/a]

Re: Practical use of Elliot analysis.

Impulse wave 5 is upwards.

In the case specifically in question this is a 5 wave impulse move DOWN
I expect that within the wave 4 we will see an ABC corrective move which could form a triangle pattern --common in wave 4s

 

[Garpal Gumnut]

And do not ever forget, even with EW.

The golden advice for all muppets.

 

[Sean K]

I have quickly grasped an example to chart below, there are better and many similiar examples but this is a recent one.

Dynamic Trading by Robert Miner is the book in my opinion (all 1.73kg of it !!), straight to the point with practical everyday examples of how the process can be used without getting bogged down in theory.

The charts below are two of ELM which is a stock that came up in my system last night and it was also being discussed somewhere else on this site last night.

The process to answer your last two paras...

ELM chart 1 below - potential breakout - at resistance - if it breaks out will resistance become support - where is the entry - where is the stop - what is the target - is it even worth considering.

ELM chart 2 below - three waves complete - W.4 complete on breakout ? - is it playing by the rules - yes, W.3 made target - where to now - what is W.5 min and max target - what is R/R at min target.

Is it a potential candidate still ?? process complete, next.

Chart 1 and 2 (click to expand)

Boggo great to see some live charts.

(Must say though, a book published x number of years ago is hardly live application. I could do that with any system in retrospect)

On ELM Chart 2, it looks interesting but your W3 and 4 look pretty shaky to my untrained eye.

Won't we only know that they are 3 and 4 after its broken 3? And even then, the 4 is not lower than the Feb 25 low. Does that still fit the EW rules?

 

[tech/a]

Kennas.

Your doing a good job controlling your skepticism.

Boggo has come close in his labelling.(Hope you dont mind Boggo)
A GET's is a little closer I think.
You are correct that after todays trading wave 4 is confirmed and wave 5 now appears.
It cannot be said that we have an end to wave 5 yet. It is still dynamic until we see a corrective move to end.
Aggressive traders could see this pivot reversal on low volume as a turning point

Click to expand



PEN the one we have been following seems to have run its race for the time being
remember I now expect this to develop into a consolidation pattern before finalizing its move down to wave 5---I think its traded at its highest now for a good while.
I traded this from 7.8c to 10.5c short and sweet.

Click to expand